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Why I am Thankful to be a Bankruptcy Attorney in West Michigan

As a bankruptcy attorney in West Michigan, I get used to the idea that no one is ever happy to come see me. Nobody sees an attorney because things are going well, nobody ever wants to file for bankruptcy, and most people in the community view me as a necessary evil. You might think this would be unfulfilling at best, and down right depressing at worst — you would be wrong.

When people see me it is because they have given up hope. They are at what is usually the lowest point in their lives, they feel like a failure who could not provide for their family, they beat themselves up more than any debt collector ever could. They have lost jobs, income, their life savings, and view bankruptcy not as a financial decision, but a moral one.

One of my favorite parts of meeting with a client is seeing the change in their outlook after I tell them that yes, there is help. That we can stop the harassment, stop wage garnishments, and rebuild their credit. There is a light at the end of the tunnel, and I feel genuinely privileged to be able to help shepherd my clients through that tunnel. Just seeing them relax, and even smile, makes me feel a little bit better.

Most attorneys get frustrated by their career which is probably why attorneys have such a high substance abuse rate. In fields like Divorce, Criminal Law, and Litigation, there is always an element of tragedy, and most times the people involved are never happy with the outcome or their attorney. One of my friends who is a divorce attorney once told me the way she knows that a divorce judgment was successful is that both sides hate it. With bankruptcy, my clients start out hopeless, but by the end of the process they are hopeful. They have seen that they can start their financial lives over, and most of the time the only regret people have is that they didn’t see me sooner.

Bankruptcy is not pleasant, but it is necessary, and can help people at the worst moments of their lives. I am proud to be a bankruptcy attorney, and I am honored that my clients place their trust in me to guide them through the process. I never thought I would be a bankruptcy attorney, but I always wanted a job where I could help people — I have that sort of job, and I love every day of it.

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DEFAULTING ON YOUR STUDENT LOANS — THE CONSEQUENCES

Student loans have been a big topic for me lately, mainly because I see so many people with so much student loan debt. Recently, the amount of credit card debt outstanding in the nation was surpassed by the amount of student loan debt. According to  recent report, roughly 20 million people attend college each year, and of that 20 million, 12 million borrow money to help pay for tuition. Current estimates show that the total amount of outstanding student loan debt is somewhere between $902 Billion and $1 Trillion  — Trillion, with a T. Perhaps even more frightening are the following statistics:

1. Only 37% of federal student loan borrowers between 2004 and 2009 managed to make timely payments.

2. Two out of every five student loan borrowers are delinquent at some point in the first five years after entering repayment.

3. The current student loan default rate is 14.7%, and for every student loan that goes into default, two others become delinquent.

I am pretty sure I’ve convinced you that this is a massive problem. What I am really hoping to do is convince you to do something about it before you go into default on your student loans. So, let’s start with the basics, what is default? Well, that depends on whether you have federal or private student loans. Let’s talk about private student loans first.

Private student loans become defaulted as soon as you miss one payment. No grace periods, no 30, 60, or 90 day late notices. If you miss just one payment, you are technically in default. As soon as you are in default on a private loan, your lender could accelerate the amount due and could file a lawsuit. Now, most private lenders don’t do that right away, but they could.

Federal loans are different than private in how a loan goes into default. Once your federal loan enter repayment status you have to start making payments. If you miss payments, you will not be in default until 270 days after the first payment was due. If you don’t know how long it has been since you made a payment, call your lender, they can tell you exactly.

So now you know how loans go into default, but what does it really mean? Well, for private loans, not much. They can sue you, and they might, but there isn’t much more that they can do except bother you and harm your credit. Now federal loans are a different story. Once you go into default these are just some of the actions they can take:

1. COLLECTION FEES: Once your loan goes into default, a debt collector who has contracted with the department of education is assigned the file. This collector gets to automatically tack on a 25% collection fee to the outstanding balance of your loan. So let’s say you had $100,000 in outstanding student loans, once you default, you now owe $125,000! Now, you can get rid of this fee by curing your default, but it is replaced by an 18.5% cure fee. So instead of $125,000 you now owe $118,500. Better than $125,000, but still a heavy price to pay.

2. ADMINISTRATIVE WAGE GARNISHMENT: The department of education can garnish your wages without having to file a lawsuit. All they need to do is give you notice that they intend to garnish, and thirty days later they can begin taking up to 15% of your wages.

3. TAX REFUND INTERCEPT: The IRS will send any refund you may receive straight to the department of education, you get nothing.

4. SOCIAL SECURITY OFFSET: Not even Grandma’s social security check is safe.

5. LOSS OF SECURITY CLEARANCE: If you are a government employee, or a government contractor, you could lose your security clearance, which could then mean you lose your job.

6. PUBLIC SHAMING: Doctors who have defaulted on certain loans have the news that they defaulted published on the internet by the department of education. And, their ability to participate in Medicaid programs could be jeopardized. http://bhpr.hrsa.gov/scholarshipsloans/heal/defaulters/index.html

Terrified yet? Don’t be. There is no good reason you should ever go into default on a student loan. We can help you to avoid default by getting you in a manageable repayment plan, your payment could even be $0.00. If you are already in default, call us immediately. We can help you get out of default and obtain a manageable repayment. The worst thing you could possibly do is ignore the problem. Student loans are scary, but manageable with the right planning. So don’t default, call us instead.

For additional information on this topic visit our Student Loan Help services.

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FORGIVENESS OF YOUR STUDENT LOAN – YOU MAY QUALIFY

If you have student loans and work for certain employers, you may be eligible for Public Service Loan Forgiveness. There is a government program that far too few people know about, but it could save people with student loans tens of thousands of dollars. Here is how the program works, if you work for a 501(c)(3) non-profit corporation or a governmental entity, you can enroll in an income-based repayment plan, and after ten years of payments, the balance of your federal student loans is completely forgiven by the government.

Unfortunately, this provision is barely used because most people either don’t know about it, or think that it only applies to certain groups. Most people usually think that only people like Teachers, Nurses, and Police Officers qualify, but that is not true. For example, Spectrum Health is a Non-Profit, so guess what, if you work at Spectrum Health in ANY capacity, whether janitor, parking attendant, or anything else — You can have your loans forgiven! This also means anyone who works for any form of government, federal, city, or state, whether you are a crossing guard or a lunch lady, you can have your federal student loans forgiven.

Here is a good example, let’s say Jim is a medical assistant at Spectrum Hospitals. He is married with two children, earns has a total household income of $60,000 per year and has $55,000 worth of student loan debt. Under the standard repayment plan, Jim would pay $632.94 per month for ten years for a total of $75,953.02 paid over the ten years. Now if Jim enrolls in Public Service Loan Forgiveness, he would have a monthly payment of $308.00 per month for the next ten years. Jim would pay $36,960, and the rest would be forgiven. So by enrolling in the loan forgiveness, Jim will save $38,993.02!

Sounds great right, so why don’t more people enroll in it? Well, most people just don’t know about it. Further, it can be complex because if you don’t have the right type of student loans, you don’t qualify. The trick is finding a good attorney with knowledge of student loan law. A qualified attorney can make sure that if you don’t have the right loans, we can turn them into the right kind so that you get your loans forgiven.

Not only will this save people tens of thousands of dollars, but for some people who are struggling financially, it could mean the difference between filing bankruptcy or not. While I am a bankruptcy attorney, I want to do everything I can to help people avoid bankruptcy if they can. So if you think you could benefit from being enrolled in this program, call us. It doesn’t matter if you are current or behind on your loans, call us so we can go over your information and determine what the best course of action may be.

For more information visit our services page about Student Loan Forgiveness.